Eurozone Inflation Remains Muted

EURUSD, H1

Eurozone Feb HICP inflation was confirmed at 1.5% y/y, up from 1.4% y/y in the previous month. The core rate was confirmed at 1.0% y/y, down from 1.1% y/y in January, highlighting that energy price variations were the main reason for the uptick in the headline rate. In fact excluding energy inflation remained steady at 1.3% y/y. The data confirms that underlying inflation remains low, which ties in with the ECB’s updated forecasts. After Draghi reacted to the weaker outlook and pushed out the timing of the first rate hike, while announcing a new round of TLTRO loans, the current inflation numbers won’t have an immediate impact on the policy outlook, although they will vindicate the doves at the council.

EURUSD has support at the daily pivot point and 20-period moving average at 1.1310 and the psychological 1.1300. The daily R1 at 1.1330 has proved too ambitious so far today. The Crossing EMA strategy moved lower during yesterday, falling from 1.1317 and finding resistance to the move lower at 1.1300. It triggered higher during the Asian session today at 04:00 and 1.1309.

EURUSD

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